SEC Issues Bulletin On Revenue Recognition

Posted by accountingweb on Dec 6 1999 255 printer friendly

Federal securities regulators, concerned with the growing number of companies inappropriately managing earnings by artificially boosting revenue, issued guidance on revenue recognition last week.

The Securities and Exchange Commission (SEC) released a staff accounting bulletin (SAB) that discloses how companies should manage revenue recognition practices. The SAB also points out basic criteria that companies must adhere to before they can record revenue.

According to the SEC, one common earnings management tool, reporting revenue before a sales transaction has occurred, can cause improper revenue recognition and may cause "spectacular, high-profile financial reporting problems."

SEC Chairman, Arthur Levitt, promised more than a year ago that he would ensure that the agency would communicate more information on revenue recognition. He has spoken out about companies who "cook the books" to meet Wall Street expectations.

Voice of the Editor

Even though any accounting auditor would tell you it seems like there are an awful lot of tax accountants out there, surely one-third of the country isn't made up of tax preparers, so it's rather startling news to learn that one-third of Americans like to do their taxes. Who knew?

This Week on AccountingWEB

Bill Walter of Gross, Mendelsohn & Associates and Harold Gaar of TravisWolff LLP weigh in on mobile technology use while employees are at work.

WestArk RSVP and Fayette County Community Action Agency – organizations that received grant funding through the IRS Tax Counseling for the Elderly (TCE) program – spoke with AccountingWEB about how they assist senior citizens in their communities.

CPA Robert Raiola, who heads the Sports & Entertainment Group of Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC, talks NFL player income taxes with AccountingWEB.

Retiring KPMG Centennial Professor of Accounting at the University of Texas at Austin McCombs School of Business Robert May, PhD talks with AccountingWEB about his rewarding forty-three-year career.